Record returns of company cars through redundancy blamed on Chancellor

Record levels of returned vehicles from staff, who have been made redundant, are being blamed on the Chancellor.

Chancellor Rachel Reeves increased employer’s national insurance contributions (NICs) from 13.8% to 15% in her Autumn Budget, reduced the NIC threshold from £9,100 to £5,000 and increased the minimum wage, all with affect from last month (April).

“The pigeons are clearly coming home to roost,” said Andrew Leech, founder of Tamworth-based Fleet Evolution and head of Mercia Fleet Management.

“Following on from Rachel Reeves’ misguided first Budget, which she said would not affect ‘working people’, we have seen record levels of returned vehicles due to redundancies of working people.”

Leech said that last month the number of returned electric or hybrid cars to the salary sacrifice and fleet management specialist rose by 43% to their highest level since the business started trading in 2012.

“It did not take a rocket scientist to realise that far from having no effect on working people, the Budget changes would have a profound effect on recruitment and retention of employees as employers looked to contain cost increases in the light of the changes to national insurance and the minimum wage,” he added.

He explained that business customers of Fleet Evolution, forced to make redundancies in this way, would not suffer financially from staff handing back cars.

There is a “no-quibble” returns policy and provide leaver protection on all its vehicles. “Staff can hand them back without fear or favour and without burdening their employers with additional costs when they are made redundant,” said Leech.

Returned cars are also finding second homes very quickly. “We are finding that there is plenty of short-term demand for these returned cars as client companies are less willing to commit to long term leases due to the degree of economic uncertainty there is at the moment,” explained Leech.

They were also in demand for the EV subscription service, Subscribe Electric, administered by sister company, Mercia Fleet Management.

“Businesses are realising that one way of mitigating the effect of these increases and exerting greater control over costs is to flexibly introduce electric cars on subscription rather than long term leases. A such we are seeking a marked lift- off in the number of cars provided by this service,” said Leech.

Subscribe Electric is available on most makes or models on the market which are provided fully expensed, including all servicing, breakdown, tyres and insurance costs, and requiring only the addition of electricity as and when required.

Leech added: “Short term EVs can be highly attractive from a cost point of view at a time of rising costs for most businesses following the Budget. And because of their zero carbon emissions, they can also play a role in helping businesses meet their corporate sustainability targets at the same time.”